Large Housing Supply Makes Buyer's Market

They are not the best of times, but they are not the worst and Peninsula builders and Realtors are philosophical about the building outlook here.

"We face a perpetuation" of the immediate past, says one.

"Interest rates are a key," say some.

Another talks of a changing world - the baby boom effects have ended - requiring adjustments. "We must diversify ... we must compromise."

Some say outright "it will improve."

And at least one thinks "we're in the process of turning the corner where the rate of sales will be stronger than the increased supply."

Finally, all agree that "it's a good time to buy a home."

Alphabetically, following are comments from five - four past-PHBA presidents and the current president - on the outlook for the rest of 1990 and into 1991.

GREG GARRETT, owner of Greg Garrett Realty and immediate HPBA past president, says "the demand will be good. I think we'll see an increase over 1989 sales of 10 percent to 20 percent.

"I think the amount of starts will be near that of 1989 and the increase in the absorption rate (sales) with the building rate recovering steadily will help balance the supply and demand."

He believes this will happen because sales will increase, but rates will remain good - that's a key. Also, the area population will increase and I believe we are still in a fairly healthy market as far as the demand on sales.

"The problem has been too much supply. I'm not sure if we've turned the corner or if we'll turn it during the year. I am sure we're in the process of turning the corner where the rate of sales will be stronger than the increased supply, therefore balancing the supply and demand to a more reasonable level."

He points out there's no scarcity of demand or buyers. "The problem is that the supply outpaced the demand. That creates a good situation for the buyers, giving them the biggest and best selection I've ever seen."

He also notes the healthy job market and "appreciation is not out of hand. If you look at the future appreciation rate we should experience in the '90s, home prices could double."

So, again, this is the time to buy, he says.

HAL MORRIS, current PHBA president, heads Hal Morris Enterprises Inc. in Newport News. He's been in building and real estate since 1962.

Morris says as president of the 435 firms who make up the association, "one of the main things I have to do is monitor the economic and political factors that affect our building activity."

Armed with that and other information, he feels "the outlook is about what it was last year - a perpetuation. It was down 10 percent from 1988 in both new homes and resale. This year will be about equal to what 1989 was.

"As the inventory of unsold new houses reduces, it will likely spur more building activity in the late spring and early summer.

"Chances are better activity will increase if interest stays the same or even slips down just a little. That, plus reduced inventory, will set the stage for 1990."

WOODY SIROIS, the 1971 PHBA president, knows the interest rate is a major factor in pinpointing what lies ahead. However, the 25-year president of Development Concepts of Virginia in Williamsburg isn't as sure about many other related factors.

"If the rate drops a little we would see a lot of improvement in people buying existing inventories," he says.

"There are a lot of homes on the market and people who would buy them, but they can't because they can't sell their existing homes." He points out not all those would-be buyers are local. "I know a lot who can't sell who would like to move to this area."

Another item he thinks about is this country's "changing demographics. The Baby Boomers have tapered off. Now we have to wait for their kids to grow up. That means we will build only 1.3 million houses in this country compared to 1.7 million about 10 years ago.

"The past 10 years have been wonderful and we (in the business) don't want it to end. What we have to do now is diversify. We have to be prudent and analyze what we're doing.

"In our business, we're building very cautiously. I'm listening to bankers and others. The thing is, it's what happens in the world, not just in America that affects us. To be a good businessman you've got to keep abreast of what's happening in the marketplace."

Like most in his business, he is affected by laws dealing with environment. He also talks of the "no-growth people" and "developers who rape the land."

"We've got to get each side to work out a plan. Compromises are necessary. There's got to be working together, but I don't know if it will come about."

ELIZABETH THOMPSON, the 1988 PHBA president, is president and manager of The Kicotan Co. Inc. Without using the word, she nevertheless talks of patience. Her outlook is one that calls for improvement.

"I'm going to go slow," she says. "I think the outlook will improve because it has been slow over a year ... It is a good time to buy a home ... interest is good and I know the cost of new homes will go up.